What’s Inventory Control? How It Works, Importance and Methods

One of the quickest ways to lose revenue — and customer trust — is to lose track of inventory. Someone places an order, and your system shows it’s available, but when it’s time to ship, the item’s nowhere to be found. Or worse, your shelves are overflowing with products no one’s buying.

Inventory control prevents both scenarios by giving you visibility into what’s in stock, what’s moving, and what you need to replenish. With the right inventory control system, you avoid stockouts and overordering — and you can respond faster to shifts in demand or supply, whether you're managing fulfillment or making upstream purchasing decisions.

In this guide, we’ll explain what inventory control is, how it differs from inventory management, and how it helps you meet demand, save money, and keep customers happy. We’ll also highlight common inventory control methods to help you find the right approach for your business.

Inventory Control vs. Inventory Management

It’s easy to confuse inventory management and control — both involve keeping stock in order but in different ways. One’s tactical, the other strategic. 

Inventory Control

Inventory control focuses on the day-to-day handling of stock: what’s currently available, where it is in the warehouse, and whether it’s ready to fulfill. It helps prevent overordering — avoiding excess inventory and unnecessary carrying costs — and guards against underordering, which can lead to stockouts and missed sales.

Inventory Management

Inventory management, by contrast, takes a bird’s-eye view. It focuses on forecasting customer demand and planning ahead — stocking high-demand products before peak seasons, preparing for upcoming promotions, and having just enough inventory on hand to meet customer expectations.

Why Both Matter

Inventory control ensures stock is accurate and fulfillment reliable, while your inventory management system helps guide you with purchasing and planning. Together, they give you visibility into what’s available now and what you’ll need next — helping you meet demand without tying up cash in excess stock or scrambling to fill orders.

Inventory Control Methods: 8 Systems and Techniques 

Inventory control looks different for every operation. What works for a high-volume retailer won’t always suit a manufacturer or a warehouse handling seasonal goods. Your approach should match the pace, complexity, and priorities of your supply chain. Below are eight inventory control methods, each designed to support a different way of managing demand, moving product, and maintaining stock.

1. Periodic Inventory Control

Periodic inventory control relies on scheduled physical counts — usually weekly, monthly, or quarterly — to update stock levels. It’s a simple, budget-friendly option for small businesses that don’t use inventory software. But without real-time updates, it leaves room for human error and creates blind spots between counts.

2. Perpetual Inventory Control

Unlike periodic counts, perpetual inventory systems update stock levels continuously whenever you make a sale or receive product, using barcodes, scanners, or inventory management software. You get real-time insight into what’s in stock, what’s low, and what you need to reorder.

3. ABC Analysis

ABC analysis breaks your inventory into three categories based on value and volume.  A-items are high-value, low-quantity. B-items sit in the middle and are moderate in cost and volume. And C-items are low-cost and high-volume and tend to move quickly, so they usually don’t require as much hands-on tracking. With the ABC method, you know where to direct your time and resources so that they’ll deliver the greatest return — whether that’s tighter control, faster turnover, or better use of warehouse space. 

4. LIFO and FIFO

FIFO and LIFO decide which inventory you sell first. FIFO — First-In, First-Out — means the oldest stock moves out first, which is ideal for items with a shelf life, like food or cosmetics. Meanwhile, LIFO — Last-In, First-Out — moves newer stock first, which often makes sense when the most recent inventory is easier to access in the warehouse or ship the quickest. The method you choose shapes how you move products through your warehouse and restock over time.

5. Batch Tracking

Batch tracking allows you to trace items to a specific group or production lot, so you always know exactly where your stock came from and where it went. That kind of insight is especially important if you need to manage a product recall or meet regulatory requirements in industries like food, healthcare, or electronics.

6. Safety Stock

No matter what you sell, customers don’t want to hear, “Sorry, we’re all out.” Safety stock is your buffer — extra inventory kept on hand in case demand spikes or a supplier falls behind. It helps prevent stockouts and lost sales. But hold too much, and you tie up space and cash. Knowing where to draw the line so you’re not overstocked when you don’t need to be is a must.

7. Just-in-Time (JIT)

Just-in-Time (JIT) keeps inventory lean: when one unit goes out, a new unit of the same item comes in. You only restock what you need when you need it. This inventory control method trims storage costs, and items are less likely to expire from sitting in your warehouse too long. But with no extra inventory on hand, even a small supply chain delay can leave you out of stock.

8. Economic Order Quantity (EOQ)

Economic Order Quantity (EOQ) uses a basic formula to help you determine the ideal order size — not too big or too small. It considers how much you sell, how much it costs to place an order, and how much it costs to store extra inventory. The goal is to find the sweet spot that keeps your shelves stocked without wasting money on storage or frequent reordering. Unlike Just-in-Time (JIT), EOQ still accounts for holding some inventory — it just helps you figure out the most efficient amount to keep on hand.

Common Inventory Control Challenges

Even the best-run businesses hit roadblocks when it comes to maintaining tight inventory control. From human error to tech hiccups, it doesn’t take much for things to spiral. Here are some of the most common challenges to be aware of:

• Human error: Manual data entry, skipped counts, or mislabeled products can throw off your entire system. These mistakes are easy to make — especially without inventory management software — but hard to clean up. Even small errors can snowball into major fulfillment issues.

• Lack of visibility: If you can’t see what’s happening across your warehouse or supply chain in real time, you’re flying blind. Poor visibility makes it tough to plan replenishment or catch problems early. Perpetual inventory systems or radio-frequency identification (RFID) and barcode scanning can help — but many businesses still rely on outdated tools.

• Inefficiency: Outdated systems or slow reorder processes cause delays, waste resources, and frustrate staff. Improving efficiency often means upgrading tools and training teams on smarter ways to track stock.

How to Improve Inventory Management and Control: 6 Tips

Inventory issues tend to trace back to a few familiar culprits: human error, limited visibility, and outdated tools. Whether it’s a skipped count, a late reorder, or inaccurate data, small missteps can ripple fast. The good news? They’re preventable. Here’s how:

1. Audit Your Stock Regularly

Even the best software needs a reality check. Use full inventory counts or rolling cycle counts to uncover discrepancies and keep your records reliable.

2. Analyze Supplier Performance

Late deliveries and inconsistent fulfillment hurt your forecasting. Evaluate suppliers regularly so your supply chain — and your stock flows — stay on track.

Poor supplier performance leads to late deliveries and frustrated customers. Evaluating your suppliers regularly ensures your supply chain management stays strong. High-performing suppliers support better forecasting, smoother replenishment, and more efficient stock management.

3. Use the Right Tech

Modern inventory software tracks stock in real time and connects with tools like barcodes and RFID. If you're still using just spreadsheets, now could be the time to upgrade.

4. Automate Wherever Possible

Set automatic reorder alerts, track incoming items, and reduce manual errors. Automation allows you to respond faster when supply or demand shifts.

5. Forecast Demand Better

Use historical sales data and behavior trends to predict what’s next. Good forecasting cuts dead stock, avoids stockouts, and gives you a leaner operation.

6. Set Smart Reorder Points

Use data — not guesswork — to determine when and how much product to restock. Methods like EOQ help you balance demand, lead times, and safety stock without taking shots in the dark.

Inventory Control Solutions to Solve Your Needs

From low-tech logs to real-time, cloud-based platforms, inventory control solutions vary widely — and so do their results. Some give you the visibility and speed you need. Others slow you down. Here’s how the most common options stack up:

Stock Books and Cards

With stock books and cards, you log inventory by hand. They’re low-cost and simple, which can work well for small teams with minimal operations. But because you have to write down each transaction by hand, they’re prone to errors and often too slow to keep up as your business scales.

Spreadsheets

Web-based tools like Excel and Google Sheets are a step up from pen-and-paper logs. You can automate stock calculations with formulas, flag low quantities with color-coded rules, and update everything faster than you could with a physical book. But as your inventory grows, even a small typo can break a formula and throw everything off.

Inventory Management Software

Inventory management software goes beyond spreadsheets. It tracks stock in real time, triggers automatic alerts, and connects with your purchasing, sales, and fulfillment systems. It involves some setup and training, but the trade-off is greater accuracy and control as your business scales.

RFID and Barcode Systems

Barcode readers log item details with a quick scan, while RFID tags capture data automatically using radio signals. Both significantly reduce the need for manual entry, making inventory records cleaner and easier to update.

Warehouse Management Systems (WMS)

WMS platforms handle more than inventory. They map your warehouse layout, automate picking and packing, track worker productivity, and coordinate shipping. They're ideal for fast-moving or complex operations but require more setup, training, and budget than other approaches to inventory control.

EDI (Electronic Data Interchange)

Most inventory tools focus on what’s happening inside your warehouse. But with inventory management, EDI goes further. It digitizes hundreds of document types — like purchase orders, shipping notices, and inventory updates — into a standardized format and automatically sends them from your internal systems to your trading partners. With no manual entry, human errors are minimal, and data flows faster. That means more accuracy across your supply chain — and more time for your team to focus on high-value work. And with the right EDI partner, getting set up is faster and easier than you might think.

How EDI Supports Inventory Accuracy

When EDI works well, it keeps your inventory control system running smoothly. Orders go out on time, data stays up to date, and you and your team can plan with confidence.

• Timely purchase orders: Automated PO transmission helps you replenish stock exactly when needed — no guesswork or delays.

• Smarter stock levels: Real-time data helps prevent overstock and understock, so you don’t waste space or miss sales.

• Reliable fulfillment: Accurate inventory tracking means you can deliver on customer expectations, protecting your reputation and bottom line.

Stay On Top of Inventory Control with EDI

Inventory control doesn’t end at the warehouse. To keep stock levels accurate, orders moving, and teams aligned, your systems need to talk to each other — and to your trading partners. EDI makes it easy.

By automating the exchange of inventory data across your supply chain, EDI reduces delays, avoids costly mistakes, and ensures stock levels are just right.

Curious about what EDI can do for your inventory control? Connect with an EDI expert to learn more.